Highlights

• We upgrade the stock to BUY with a higher DDM-based target price of RM7.00. We raised long-term growth from 2% to 3%, suggesting that the stock will benefit from higher NG volumes as Malaysia races towards clean energy transition while housing 13GW of data centre power demand.
   
• We believe the stock is set to benefit from two key themes: a) energy transition requiring 8GW of gas-fired power plants to be built by 2031; and b) potential liberalisation of power sector NG supply chain – allowing power plants to secure NG independently from shippers such as Gas Malaysia. In addition, Gas Malaysia may also benefit from off-grid cogen opportunities as DCs “search” for more power supply in Malaysia.
   
• Yan RGT is expected to reach commercial operations by 1Q31 with a capacity of 500 mmscfd. We gather that up to 90% of the capacity may have been secured as we expect the project to lift EBITDA by 13% with a net present value (equity value) of RM0.58/share.
   

Analysis

• NG reforms in Peninsular Malaysia… Against the backdrop of energy transition (towards net-zero greenhouse gas emission by 2050) and Malaysia’s aggressive 13GW data centre (DC) plant up, we identify Gas Malaysia as a thematic winner in Malaysia’s natural gas (NG) supply chain reform. As a key transition fuel, NG is projected to account for 56% of Malaysia’s total primary energy supply by 2050, up from 47% in 1H26.
   
• ….to benefit Gas Malaysia. Key re-rating catalysts for the stock: a) earnings recovery in 2027; b) benefits from the government’s NG roadmap, which is expected to be announced in 1H27; and c) ability to capture unregulated business opportunity as the Data Centre Task Force is now pushing DC operators to secure off-grid power supply. We note that Gas Malaysia has experience operating cogen plant in Penang. We upgrade the stock to BUY with a higher DDM-based target price of RM7.00, based on 3% growth rate vs 2% growth rate.